Employee Compensation Remains the Largest Component of Income in the EU
Employee compensation remained the top component of income in the European Union (EU) throughout 2023, accounting for 47.0% of GDP, according to data published today by Eurostat. This figure remains stable compared to the previous year, confirming the importance of this component in the European bloc’s economy.
Twelve Member States registered a share of GDP higher than the EU average in terms of employee compensation. Among them, Slovenia (53.2%), Luxembourg (52.8%), and Germany (52.3%) positioned themselves at the forefront, followed by countries like France, Denmark, and Latvia. On the other end, Ireland (26.2%), Greece (34.7%), and Romania (37.7%) were the countries with the lowest share of employee compensation in GDP.
In a long-term analysis, it can be observed that the proportion of employee compensation in GDP has experienced a slight decrease in the EU over the past 20 years (-0.3 pp), while in the eurozone it has experienced a slight increase (+0.1 pp). These divergent trends can be attributed to different economic and social factors specific to each region.
Other Components of Income
Taxes on production and imports (minus subsidies) experienced a decrease of 0.2 percentage points in the EU compared to 2022, standing at 10.9% of GDP. In the eurozone, this component remained stable.
On the other hand, the gross operating surplus and mixed income remained stable both in the EU and the eurozone compared to 2022, representing 42.1% and 41.7% of GDP, respectively.
Long-Term Trends
Looking at the long-term evolution of each component, we observe that:
- Employee compensation: After a decreasing trend between 2003 and 2007, it experienced a significant increase during the economic crisis of 2008-2009, before gradually decreasing to its current level.
- Taxes on production and imports (minus subsidies): They have experienced a general increase in the last 20 years, with occasional exceptions such as the economic crisis of 2008-2009 and the COVID-19 pandemic in 2020.
- Gross operating surplus and mixed income: It suffered a significant decline during the financial crisis of 2008-2009, after a period of constant growth between 2003 and 2007. Since 2016, this component has experienced a gradual recovery.
In conclusion, employee compensation remains the main component of income in the EU, with a significant share of GDP. While there is a slight downward trend in its long-term share, this component remains crucial for the economy of the European bloc.